Abstract

SAUCEDO DE LA FUENTE, David  and  BERRY, Brian J. L.. The Effect of Drug-Related Violence on Labor Productivity in Mexico: A Spatial Panel Data Analysis. Invest. Geog [online]. 2019, n.100, e60021.  Epub Feb 27, 2020. ISSN 2448-7279.  https://doi.org/10.14350/rig.60021.

This study examines the determinants of labor productivity for Mexico at the state level over the period 2003-2016 using annual data. The GMM technique is used to estimate a spatial panel data model that includes a spatial weight matrix (W), the spatial lag of the dependent variable (ρ), the spatially weighted average of lagged drug-related violence rate (θ), the spatial lag of the error term (λ), and adds instrumental variables to control for the endogeneity of drug-related violence. Our results indicate that drug-related violence exerts a negative and significant impact on labor productivity. Similarly, there is evidence of the negative spillover effects of drug-related crimes on regional GDP per worker. Public investment per capita has a highly significant effect on labor productivity while the impact of the 2008-2009 financial crisis was negative.

Keywords : Mexico; War on Drugs; labor productivity; drug-related violence; spatial autocorrelation; Bivariate Moran’s I; public investment; employment density.